Speculation is the new luxury good

An NFT has zero utility. It’s simply an entry in the blockchain that shows ownership of something that anyone could see for free.

A luxury good is one where the price paid is much higher than the apparent utility it offers. We pay extra precisely because it’s not a good value. The utility lies in how we and our peers think about it. The scarcity and bling of a luxury good are used to increase our status (in our own eyes and those in our cohort).

And so, a top-end Mercedes isn’t much better at being a car than a Hyundai is, it simply costs more.

As engineering has improved and knock-offs have increased, though, the two-hundred-year tradition of physical luxury goods is fading away.

Speculation is a great hobby if you can afford it, but it shouldn’t be confused with investment.

There are now hundreds of digital NFTs each worth more than a million dollars each. Just like Reddit stocks, they change in value dramatically, they come with a story and they’re fun to talk about with your friends and peers.

One thing that’s taking its place is speculation.

But that in itself is a sort of luxury.

And one day, every one of them will be owned by someone who is unable to sell it at a profit.